This Week In Foodservice looks at Technomic’s latest restaurant industry forecast, examines unit growth, reports on the size of the burger market and a whole lot more.

Technomic dropped its 2014 forecast to 3 percent sales growth, down from the research company’s initial projection of 3.5 percent. This due to a 2 percent decline in sales in the first quarter of 2014, primarily because of harsh weather. Technomic went on to state that public companies did better than privately held ones, with public companies experiencing sales growth of 2.8 percent while the privately owned companies’ sales declined 3.1 percent.

Despite the lower sales volume Technomic projects some real growth, which means sales actually increasing after adjusting for menu price inflation, but calculates it will be a razor thin at 0.1 percent. The difficulty is that the forecast for restaurants sales is 0.4 percent. The good news is that Technomic believes there will be varying real growth in other segments including supermarkets, lodging, B&I, education and healthcare.

As for 2015, Technomic paints a brighter picture, estimating 3.1 percent nominal growth and 1.2 percent real growth. Further, most segments should have some degree of real growth with the exceptions of C-stores and transportation, which are predicted to be flat.

Technomic tends to be conservative in their outlook and 2015 is still off in the cloudy future so foodservice might be better than Technomic now predicts. Then again, the unforeseen bitter winter certainly hurt the industry.

Economic News This Week

The Consumer Price Index rose 0.4 percent in May, which translates to a 2.1 percent increase for the past 12 months. Without energy and food prices factored in — the “core” index — consumer prices were up 0.3 percent, marking the largest increase since August 2011. The price of food rose 0.5 percent with food at home up 0.7 percent.

Initial jobless claims totaled 312, 000, a decline of 6,000 for the week ending June 14. The 4-week moving average also fell to 311,570, a decline of 3,750.

Industrial production rose 0.6 percent in May after falling 0.3 percent in April. The Federal Reserve also reported that Capacity Utilization rose to 79.1 in May from 78.6 in April. The Fed pointed out that capacity utilization is 1 percent below its long run average from 1992-2013.

New residential construction presented a mixed picture, according to U.S. Commerce Department data. May building permits were at a seasonally adjusted annual rate of 991,000, down 6.4 percent from April and down 1.9 percent from May 2013. Single-family permits were up 3.7 percent over April. Housing starts were at a seasonally adjusted annual rate of 1,001,000, which is 6.5 percent less than April starts but 9.4 percent more than the number of starts in May 2013. Single-family housing starts declined 5.9 percent from April.

The Philadelphia Federal Reserve’s Business Outlook Survey showed increasing activity in the region with the index rising to 17.8 in June, up from 15.4 in May. The indices for new orders, shipments and employment all advanced over last month.

Consumer confidence in the U.S. economy slips. The Gallup Organization reported its Economic Confidence Index gave up 1 point to reach -15 for the week ending June 15. As noted in previous weeks, the Gallup’s confidence data has been remarkably consistent for most of this year.

Foodservice News This Week

Restaurant unit growth continues. The National Restaurant Association, using U.S. Bureau of Labor Statistics data, reports the number of restaurants grew by more than 8,300 last year. The rate of growth has slowed, however, with the industry adding 11,649 locations in 2012 and 9,944 new places in 2011.

How big is the burger business in the U.S.? Thanks to Scott Hume, publisher/editor of Burger Business, who passed along a report from CHD Expert showing that burger menu restaurants generate annual sales of $73 billion from 49,000 locations, which translates into roughly 1.6 burger restaurants for every 10,000 Americans. The market consists of about 14 percent independent operators and 86 percent chain operators. Burger restaurants account for 7.4 percent of all U.S. restaurants. Looking at the total number of burger restaurants by state, California tops the list followed by Texas, Florida, Ohio and Illinois. Only 8.7 percent of burger restaurants fall into the fast-casual classification.

Food away from home prices rose 0.2 percent in May, according to the Bureau of Labor Statistic’s Consumer Price Index. The Commerce Department reports that sales at restaurant and drinking places are up 3.7 percent this year thru May and, with menu price inflation running at slightly more than 2 percent, it would appear that the foodservice industry is possibly scratching out real growth of about 1.5 percent.

Smaller may be better when it comes to customer satisfaction.The American Customer Satisfaction Index reports smaller chains are gaining satisfied customers while the satisfaction level with the larger chains is deteriorating. The founder of the ACSI theorizes that as the economy improves price plays a lesser role and consumers go for quality, which they perceive as higher at small operations. This trend was true for both full service and limited service restaurants.

What are the dirtiest things in a restaurant?According to a panel on technology at the recent FARE Conference it just could be the ubiquitous paging devices that a number of people handle regularly. Restaurants virtually never clean these items.

Corporate Stirrings: S.B. Restaurants, parent of the Elephant Bar chain, filed for reorganization under Chapter 11 bankruptcy. Darden Restaurants announced its sale of the Red Lobster chain is on track and should close in July. Standex International Corp. announced the acquisition of San Antonio based Ultrafryer Systems.

Growth Chains: 7-Eleven has signed a franchise development agreement for 100 outlets in the United Arab Emirates by the end of 2017. MOD Pizza will open as many as 15 locations in North Carolina in the next 5 years. Tropical Smoothie Café will open 25 locations in the Denver area in the coming years. Blaze Fast Fire’d Pizza will be opening a new restaurant approximately every 6 days for the rest of the year ending with a total of 60 locations. Schlotzsky’s Deli plans on signing a total of 45 new franchises in the Denver area by the end of the year. Russo’s New York Pizzeria plans to open 10 to 12 restaurants in Texas this year. Culver’s plans on opening 4 locations in Tampa and 2 in Bradenton by 2015. Penn Station East Coast Subs has signed a franchise agreement to open up to 10 shops in the Chicago market. Tim Horton’s will open 40 restaurants in the St. Louis area by 2019.